Nevada is moving to shut Coinbase out of the state’s prediction markets unless the crypto giant obtains a traditional gaming license, escalating a growing clash between financial regulators and gambling authorities over who gets to oversee event-based betting in the U.S.
On Monday, the Nevada Gaming Control Board (NGCB) filed a civil enforcement action against Coinbase Financial Markets in the District Court for Carson City. The filing seeks to bar Coinbase—a CFTC-registered exchange—from offering event-based contracts tied to sports and political elections to residents of Nevada unless it complies with the state’s rigorous gaming licensing regime.
The move comes just weeks after Coinbase rolled out its prediction markets product to U.S. users through a partnership with Kalshi, a designated contract market regulated by the Commodity Futures Trading Commission (CFTC). The product allows traders to buy and sell contracts on the outcomes of real-world events, including sports contests and electoral races, in a format that closely resembles both prediction markets and regulated derivatives.
In its court documents, the NGCB submitted both a complaint for permanent injunction and declaratory relief, as well as an ex parte application for a temporary restraining order. The aim is to halt Coinbase’s Nevada-facing operations related to these contracts while the legal issues are resolved. An ex parte request means the board initially sought emergency relief without Coinbase present in court, arguing that immediate action was necessary to protect the state’s regulatory interests.
According to the filing, Nevada regulators view these contracts not as harmless financial hedging tools, but as a form of gambling under state law. The board stated that offering contracts on sports events—or certain other real-world events—constitutes “wagering activity” under Nevada Revised Statutes 463.0193 and 463.01962. On that basis, the NGCB argues that any company facilitating these products for Nevada residents must be licensed as a gaming operator, subject to strict suitability, reporting, and compliance obligations.
The enforcement action lands against a backdrop of increasingly contentious jurisdictional battles. Coinbase has already sued regulators in three other U.S. states in federal court, challenging attempts to treat prediction markets and certain crypto-linked products as unlicensed gambling. Those suits argue that when products are overseen by federal financial regulators like the CFTC, states cannot simply reclassify them as gaming and impose a parallel regulatory regime.
Nevada’s case raises a fundamental question: where is the line between a regulated derivatives market and illegal or unlicensed betting? Kalshi and Coinbase position their offering as a federally supervised financial instrument—similar in structure to binary options or other event-based derivatives. Nevada, however, is treating the same product as a digital sports book and election betting platform that happens to run on crypto infrastructure.
For crypto companies, Nevada’s stance is particularly significant because the state is widely seen as the gold standard of gambling regulation. Its statutes and case law have influenced how other jurisdictions define wagering, sports betting, and gaming devices. If Nevada successfully asserts that prediction markets—regardless of federal CFTC registration—are gambling when offered to the general public, other states may follow that model.
The board’s reference to NRS 463.0193 and 463.01962 is also telling. These provisions broadly define what counts as a gambling game or wager, allowing regulators to treat new formats—such as app-based prediction markets, tokenized bets, or event contracts—as part of the same universe as traditional sports books and casinos. That legal flexibility has historically allowed Nevada to keep pace with technological change while maintaining tight control over gaming activities.
Coinbase’s partnership with Kalshi was designed precisely to avoid this kind of state-level gaming confrontation. Kalshi operates under federal commodities law as a designated contract market, and its event contracts are structured and cleared within that framework. By routing U.S. prediction trades through a CFTC-regulated venue, Coinbase effectively pinned its regulatory strategy on the idea that federal oversight would be sufficient and preempt contradictory state gambling rules.
Nevada is now pushing back against that assumption. Its lawsuit implicitly argues that federal commodities regulation and state gambling law can coexist—and that being compliant with one does not immunize a firm from the other. If a product looks, feels, and is marketed like a bet on sports or a political outcome, the state maintains it can treat it as gambling no matter how it is labeled in the financial-regulation realm.
For users in Nevada, the practical consequences could be immediate. If the court grants the temporary restraining order and, later, a permanent injunction, Coinbase would be forced to block Nevada residents from accessing event-based contracts on sports and elections through its platform. This would mirror existing geographic restrictions already seen across the crypto and derivatives ecosystem, where certain products are unavailable in specific states due to local rules.
More broadly, the case illustrates a growing regulatory fragmentation in the United States. Crypto firms and prediction market platforms now face a patchwork of overlapping and sometimes conflicting regimes: securities law, commodities law, money transmission rules, and, increasingly, gambling statutes. Each category brings its own licensing requirements, capital standards, and enforcement risks. Operating nationwide increasingly means designing products around the most restrictive states—or excluding those states altogether.
From a policy standpoint, Nevada’s move also spotlights the sensitivity of political and election-related betting. While some countries allow heavily regulated wagering on elections, U.S. regulators have generally treated such markets with caution or outright hostility, arguing that financial incentives tied to political outcomes could undermine public confidence or invite manipulation. By explicitly targeting election-related contracts in addition to sports, the NGCB signals that it considers both domains equally within its purview.
For Coinbase, the timing is challenging. The company is already involved in high-profile disputes with federal securities regulators over the classification of various crypto assets, as well as these new clashes over prediction markets at the state level. Each additional front raises compliance costs, legal exposure, and uncertainty for product roadmaps. It also complicates Coinbase’s effort to position itself as a fully regulated, mainstream financial institution in the U.S. market.
Investors and traders interested in prediction markets should pay close attention to how courts frame the core legal question: are these contracts primarily tools for information discovery and risk management, or are they essentially a tech-forward form of betting? If judges side with state gaming boards, the future of open access prediction markets in the U.S. may shift towards narrow, institutional, or purely offshore offerings.
On the other hand, if courts affirm that CFTC registration and federal oversight suffice for event-based contracts, states may be forced to recalibrate their approach—and focus instead on consumer protection, advertising, and anti-fraud measures that sit alongside, rather than override, federal financial rules. That outcome could pave the way for broader, legally secure prediction markets integrated into mainstream crypto exchanges.
Until the Nevada case and the related federal lawsuits are resolved, prediction markets in the United States will remain in a legal gray zone. Platforms will likely continue experimenting with geofencing, product design tweaks, and nuanced event definitions in an attempt to thread the regulatory needle. For now, Nevada’s enforcement action underscores that any company offering event contracts on sports or elections without a state gaming license should expect intense scrutiny—and potentially, a day in court.